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Case study (5) Focus on Diversification

Strengths and weaknesses of interventionist policies

Syllabus: Strengths of Interventionist policies

Discuss the strengths of interventionist policies including:
(PPC shift to right; Shift AS to right)
  • the provision of infrastructure,
  • investment in human capital,
  • the provision of a stable macroeconomic economy and
  • the provision of a social safety net.


The remaining case study focuses on a consideration of interventionist policies.

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This article considers agricultural policy within the Philippines and, in particular, examines government intervention to encourage a transition from rice consumption to corn consumption.

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  1. Explain the problems associated with the Philippines relying on rice as a staple food crop.
  2. In the past in order to stabilize the price of rice the Filipino government had to intervene in the market by using a buffer stock scheme. Using diagrams examine how such a buffer stock arrangement can stabilise the price of commodity such as rice.
  3. Identify the reasons why the Filipino government want to encourage the replacement of rice production with corn.
  4. Describe the policies the government is adopting to bring about this transition from rice to corn.
  5. Would you consider the policies introduced by the government to be market oriented or interventionist? Explain your answer.
  6. The article states that eventually the government would want corn production to be in the hands of private farmers. Examine the reasons for wanting this.